Thursday, November 27, 2008
What the FED? TALF Credit Card Bailout is NONSENSE!!!
Excerpts from: http://www.thestreet.com/story/10450220/1/what-the-fed-talf-makes-me-ralph.html
"Treasury and the Federal Reserve on Tuesday said they will provide $200 billion in financing to investors buying a variety of consumer debt, including credit card loans. The program, called the Term Asset-backed Securities Loan Facility, or TALF, is supported by $20 billion in credit protection from the $700 billion Troubled Assets Relief Program, or TARP, approved by Congress last month.
In theory, the TALF program is intended to provide liquidity to the system, allowing big pocketed investors like hedge funds to buy up debt and allow lenders will make more loans. Moreover, the government loans are non-recourse, meaning if anything happens -- if the borrower goes bust -- taxpayers are on the hook.
Not a bad deal for the lenders. They make more loans and collect more interest from borrowers, and the government shoulders the risk. But as the lenders get sweetheart deals from the government, they are playing games with their customers.
Citigroup recently informed customers -- even those in good standing -- that it would jack interest rates from 9.99% to 24.99%, according to a letter one recipient shared with TheStreet.com. The customers can reject the higher interest, but that means they can't charge any more on their cards and must pay off the current card debt.
You'd think a company that just received a $20 billion bailout from the government -- in addition to the coming TALF aid -- might be more mindful of customer service
The TALF loans are for one year, but the Fed said it would extend the term, if necessary. The loans are also not subject to mark-to-market accounting. If you take in collateral without pricing it, you are buying it. Read between the lines -- there is no "lending" happening here.
Wouldn't it be nice if while the Federal Reserve was making all these deals to help our banks and credit card companies they forced them to do a little something for consumers? Couldn't the Fed force the banks to limit the interest rates they are charging? Force them to cap late payment fees?
Yes. The Fed could do all this and more. But the Federal Reserve is not helping taxpayers. The Federal Reserve is helping badly run banks. "
Oh geez, where to start?
This is really really looking to be a big huge RIP-OFF of the American public.
In my opinion, they should freeze Paulson's bank accounts and suspend his travel documents.
I am almost CERTAIN he has been accepting enormous bribes at this point.
The 700 billion bailout was voted YES by congress... to help MORTAGE HOLDERS and the American Public! ... and AS SOON as it was approved, Paulson decided not 1 cent would go to American citizens... he gave half of it to the banks! Who then used it to pay bonuses (until Goldman showed that you COULD refuse to give bonuses and somehow retain your staff, proving the previous claims to be a pack of lies) and also to buy up other ailing banks in a predatory vulture style of behaviour.
Now, this TALF was meant to help out Credit Card debtors (ie 99% of americans), students, and auto loan applicants.
Instead, WTF??? This has turned into a massive gift to credit card companies... and these companies have turned around and basically frozen credit to their existing cardholders, and raised interest rates too???
Hello??? This plan is obviously to enrich credit card companies at the expense of the consumers AND the taxpayers!!!
Let's look at the details of this loan again... it is non-recourse??? In other words, the borrowers can just declare "oh. We are short on cash this month. Therefore we are defaulting. Sorry." and you basically can't do ANYTHING???
Secondly, the loans are non marked to market. NOT MARKED TO MARKET! Yes! That means that even if the credit card debt used as collateral for this deal becomes 100% non-performing loans, ie there is 100 billion worth of loans and ALL of it becomes bad debts... it is still going to show up as 100 billion worth in book value!
Heck, non-marked to market means that you could use an uninsured HOUSE worth USD1million as collateral... and when the house burns down (uninsured), you would still list it as worth USD 1 million even though there is nothing but a pile of burning timbers!
Obviously, this is insanity.
Paulson should go to jail for this. I am not joking. I am not joking whatsoever. There are laws about this sort of thing, go look up the rules about Accounting Practices, Paulson. There are rules about duty and agreements and such, and Paulson has clearly ignored the rulings that Congress made regarding the bailout. This is a travesty.
Update: http://www.nytimes.com/2008/11/26/business/economy/26tarp.html?ref=business
FINALLY, it's time for an AUDIT and OVERSIGHT COMITTEE to go submit a report on the bailout effort thus far.
"Treasury and the Federal Reserve on Tuesday said they will provide $200 billion in financing to investors buying a variety of consumer debt, including credit card loans. The program, called the Term Asset-backed Securities Loan Facility, or TALF, is supported by $20 billion in credit protection from the $700 billion Troubled Assets Relief Program, or TARP, approved by Congress last month.
In theory, the TALF program is intended to provide liquidity to the system, allowing big pocketed investors like hedge funds to buy up debt and allow lenders will make more loans. Moreover, the government loans are non-recourse, meaning if anything happens -- if the borrower goes bust -- taxpayers are on the hook.
Not a bad deal for the lenders. They make more loans and collect more interest from borrowers, and the government shoulders the risk. But as the lenders get sweetheart deals from the government, they are playing games with their customers.
Citigroup recently informed customers -- even those in good standing -- that it would jack interest rates from 9.99% to 24.99%, according to a letter one recipient shared with TheStreet.com. The customers can reject the higher interest, but that means they can't charge any more on their cards and must pay off the current card debt.
You'd think a company that just received a $20 billion bailout from the government -- in addition to the coming TALF aid -- might be more mindful of customer service
The TALF loans are for one year, but the Fed said it would extend the term, if necessary. The loans are also not subject to mark-to-market accounting. If you take in collateral without pricing it, you are buying it. Read between the lines -- there is no "lending" happening here.
Wouldn't it be nice if while the Federal Reserve was making all these deals to help our banks and credit card companies they forced them to do a little something for consumers? Couldn't the Fed force the banks to limit the interest rates they are charging? Force them to cap late payment fees?
Yes. The Fed could do all this and more. But the Federal Reserve is not helping taxpayers. The Federal Reserve is helping badly run banks. "
Oh geez, where to start?
This is really really looking to be a big huge RIP-OFF of the American public.
In my opinion, they should freeze Paulson's bank accounts and suspend his travel documents.
I am almost CERTAIN he has been accepting enormous bribes at this point.
The 700 billion bailout was voted YES by congress... to help MORTAGE HOLDERS and the American Public! ... and AS SOON as it was approved, Paulson decided not 1 cent would go to American citizens... he gave half of it to the banks! Who then used it to pay bonuses (until Goldman showed that you COULD refuse to give bonuses and somehow retain your staff, proving the previous claims to be a pack of lies) and also to buy up other ailing banks in a predatory vulture style of behaviour.
Now, this TALF was meant to help out Credit Card debtors (ie 99% of americans), students, and auto loan applicants.
Instead, WTF??? This has turned into a massive gift to credit card companies... and these companies have turned around and basically frozen credit to their existing cardholders, and raised interest rates too???
Hello??? This plan is obviously to enrich credit card companies at the expense of the consumers AND the taxpayers!!!
Let's look at the details of this loan again... it is non-recourse??? In other words, the borrowers can just declare "oh. We are short on cash this month. Therefore we are defaulting. Sorry." and you basically can't do ANYTHING???
Secondly, the loans are non marked to market. NOT MARKED TO MARKET! Yes! That means that even if the credit card debt used as collateral for this deal becomes 100% non-performing loans, ie there is 100 billion worth of loans and ALL of it becomes bad debts... it is still going to show up as 100 billion worth in book value!
Heck, non-marked to market means that you could use an uninsured HOUSE worth USD1million as collateral... and when the house burns down (uninsured), you would still list it as worth USD 1 million even though there is nothing but a pile of burning timbers!
Obviously, this is insanity.
Paulson should go to jail for this. I am not joking. I am not joking whatsoever. There are laws about this sort of thing, go look up the rules about Accounting Practices, Paulson. There are rules about duty and agreements and such, and Paulson has clearly ignored the rulings that Congress made regarding the bailout. This is a travesty.
Update: http://www.nytimes.com/2008/11/26/business/economy/26tarp.html?ref=business
FINALLY, it's time for an AUDIT and OVERSIGHT COMITTEE to go submit a report on the bailout effort thus far.
Labels: Bailout, Credit Cards, FED
Jasonred79 invested at
1:14 AM
1 Comments
1 Comments:
I am getting real sick of this real fast. I am disgusted at the govt - I saw this coming clear as day FIVE YEARS AGO...there's no way THEY didn't and yet let it continue. People making nothing living in McMansions and driving brand new SUV's. But they refused to stop the banks from destroying the economy in favor of short-term gains and executive self interest. As much as I enjoyed the sight of Alan Greenspan w/his mouth agape, 'Uh..I just never believed that the banks would act in a way that would be contrary to their own self interest...' THIS is the guy we put at the helm of the FED?!?!? Did he not recognize the disconnect between individual self-interest and organizational interests? Did he not get the disconnect between short and long term corporate objectives and how compensation plays a role in that.
Finally, I am sick to death of the media turning greedy sob's into 'victims of the sub-prime mess'. There are select few who were conned and others who have lost their job b/c of the downturn, but for those whose ARM rate reset...you're the villian, not the victim. I'M THE VICTIM. I am responsible and lived within my means. Yet my house was more expensive thanks to you and now my 401K and investment portfolio is in the tank. I know you don't care about that because you didn't save, but take it from someone who has sacrificed to put something away, someone who has a 19 inch non-flat screen TV and drives a Honda Civic despite making over $175K/year - I'm the victim, not you.
NOW they want to do more to stimulate credit card spending? We need to get all of that accumulated debt off the books! Real wages are down from 1970's levels and debt is through the roof and they want us to SPEND?
OK...I'm getting a little outta control here, so I'll stop. WOW...I think I'm angrier than even I knew! :-)
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